Layne Christensen amends asset-based loan, ups pricing by 50 bps

By Susanna Moon

Chicago, Feb. 5 – Layne Christensen Co. amended its asset-based credit agreement, increasing pricing by 50 basis points, according to an 8-K filing with the Securities and Exchange Commission.

The company amended the credit agreement on Jan. 23 to allow it to enter into equipment utilization agreements with Liberty Mutual Insurance and other surety companies that would allow the surety companies to use the company’s equipment in connection with completing any bonded contracts for which they have issued a surety bond.

The company also entered into an amendment to its asset-based credit agreement that will permit the issue of some second-lien notes, an exchange of convertible notes and the grant of the subordinated liens securing the second-lien notes issued in the offering.

The company said Thursday that it priced about $100 million principal amount of 8% senior secured second-lien convertible notes due May 1, 2019 to be issued in exchange for its 4.25% convertible senior notes due 2018 as well as for cash.

Holders of the 4.25% convertibles have agreed to exchange $55.5 million of their notes for about $49.9 million of the notes and to purchase about $49.9 million aggregate principal amount of additional notes for cash.

More loan amendments

In addition, the amendment will reduce the maximum facility amount to $120 million from $135 million until the company has delivered financial statements and a compliance certificate for any fiscal quarter demonstrating a consolidated fixed charge coverage ratio of at least 1 times for four consecutive quarters ending with the fiscal quarters.

The amendments also

• Increase the quarterly unused fee to 50 bps from 37.5 bps if the daily average total revolving exposure during the quarter exceeds 50% of the total revolving commitments;

• Eliminate any of the company’s owned real estate from the borrowing base, which accounted for about $4.2 million of the company’s borrowing base;

• Provide the lenders under the asset-based credit agreement with a monthly forecast of cash flows for the following 13 weeks;

• If at the end of any business day, the company or any of the co-borrowers under the asset-based credit agreement have cash or cash equivalents of more than $15 million, require the company to use the excess amounts to prepay any revolving loans then outstanding by the end of the following business day; and

• Accelerate the maturity date to May 15, 2018 under some circumstances.

The asset-based credit agreement will permit the company to make voluntary prepayments, payments, repurchases or redemptions, retirements, defeasances or acquisitions for value of the second-lien notes if the payment conditions are satisfied.

Layne Christensen is a water management, construction and drilling company based in the Woodlands, Texas.

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